StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Sonoma Wines - Case Study Example

Summary
The paper "Sonoma Wines Case" provides a case study on sales of wine produced in Sonoma County, USA. Grape varieties such as Petite Sirah and Sauvignon Blanc were compared for the cost per bottle, and the profit margins they would bring…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92.1% of users find it useful

Extract of sample "Sonoma Wines"

Sonoma Wines Case study Sonoma Wines Case study $10,000 will be used to finance initial purchase of grapes which will constitute the first wine batch. Preliminary planning horizon is two years. Original grape cost per bottle is given as follows, Year 1 Year 2 Petite Sirah $ 0.80 $ 0.75 Sauvignon Blanc $ 0.70 $ 0.85 Price per bottle is given as follows, Year 1 Year 2 Petite Sirah $ 8.00 $ 8.25 Sauvignon Blanc $ 7.00 $ 7.00 Advertising cost per bottle, Year 1 Year 2 Petite Sirah $ 0.20 $ 0.17 Sauvignon Blanc $ 0.13 $ 0.10 Assuming cash made from sales in the first year is available for the second year, the number of Petite Sirah bottles sold annually is within the range of 40% and 70%. Additionally, year 2 grapes will be purchased in year 2. The answer to the problem is formulated as two integer linear programming problems, one for the 1st year and the other for the 2nd year. For the first year, t = 1 Available funds = $ 10,000 For brand Petite Sirah the cost for grape is $0.80 per bottle and for Sauvignon Blanc the cost for grape is $0.70 per bottle. Additionally, it is provided that for a dollar spent in promoting Petite Sirah, produces a demand for 5 bottles and a dollar spent in promoting Sauvignon Blanc, produces a demand for 8 bottles . This means the advertisement cost per bottle for Petite Sirah is $0.20 and the advertisement cost per bottle for Sauvignon Blanc is $0.125. The cost-profit structure of the two targeted brands during the 1st year is as follows. Grape cost Advertisement cost Total cost Selling Price Profit Petite Sirah $ 0.80 $ 0.20 $ 1.00 $ 8.00 $ 7.00 Sauvignon Blanc $ 0.70 $ 0.125 $ 0.825 $ 7.00 $ 6.175 Suppose x bottles of Petite Sirah and Y bottles of Sauvignon Blanc are produced, total profit function is maximized as shown below, Question 1: Determine how many grapes to purchase, how much money to be spent on advertising, how many bottles of wine to sell, and how much profit George can expect to earn over the two year period Year Petite Sirah bottles produced Sauvignon Blanc bottles produced Profit 1 4,469 6,704 2 62,457 26,767 692,645 It assumed that, in addition to the bottle left in year 2, all those produced in year 1 will as well be sold. Year Grape costs Advertising costs Demand generated (PS) Demand generated (SB) 1 $ 8,268 $ 1,732 $ 4,469 $ 6,704 2 $ 69,595 $ 13,086 $ 62,457 $26,767 QUESTION 2: The loan officer estimates that the price used for Sauvignon Blanc in the second year is highly speculative and realistically might only be the price George calculated. 50% decline in Sauvignon Blanc price in year 2 produces a 13.5 % decline in estimated profits. This should not deter acquisition of bank loan. The business is expected to retain solvency and be profitable. Original profit New Profit Profit change $ 692,645 $ 598,959 -13.5% QUESTION 3: If holding charges are $ 0.10 per bottle per year, how much, if any, does George’s plan change? Due to the fact that all produced bottles are expected to be sold, George’s plan remains unaltered by inventory. The holding charge of $0.10 per bottle per year affects the plan only where the bottles sold are lower than the production in either year. QUESTION 4: The cost of grapes might go up by anywhere from 50% to 100%. How migt this affect George’s plan? The rise in grape prices due to striker over unionization of grape workers could significantly affect the plan. Optimal profits will be as low as $198,841 due to a 100% cost increment. At 50% cost increase, expected profits will only be $339,877. As a matter of fact, every 10% cost increase results into approximately 10% decrease in profits. Year 1 bottles produced Year 1 bottles Sold Year 2 bottles produced Unit influence factor Total profit at end of year 2 Petite Sirah Sauvignon Blanc Petite Sirah Sauvignon Blanc Petite Sirah Sauvignon Blanc 0.5 $339,877.4 $3,162 $ 4,743 $3,162 $ 4,743 $ 31,100 $13,329 0.6 $302,055.1 $2,987 $ 4,481 $2,987 $ 4,481 $ 27,738 $11,888 0.7 $270,050.1 $2,831 $ 4,246 $2,831 $ 4,246 $ 24,893 $10,669 0.8 $242,727.7 $2,690 $ 4,035 $2,690 $ 4,035 $ 22,465 $ 9,628 0.9 $219,217.2 $2,562 $ 3,844 $2,562 $3,844 $ 20,375 $ 8,732 1.0 $198,841.0 $2,446 $ 3,670 $2,446 $3,670 $ 18,564 $ 7,956 Profit per scenario Read More

CHECK THESE SAMPLES OF Sonoma Wines Case

Supreme Court Case Law in Criminal Cases of Sodomy

The report "Supreme Court case Law in Criminal Cases of Sodomy" examines the two decisions to discover the inconsistencies of criminal prosecution for consensual sodomy and assesses the reasons for them.... In 1986, the Supreme Court of the US issued a judgment in the case of Bowers v.... In connection with the issue of fundamental rights of the defendant, the Court stated: 'None of the fundamental rights announced in this Court prior cases involving family relationships, marriage, or procreation bear any resemblance to the right asserted in this case....
6 Pages (1500 words) Report

The Kreutzer Sonata by Leo Tolstoy Analysis

The essay "The Kreutzer Sonata by Leo Tolstoy Analysis" focuses on the critical analysis of The Kreutzer Sonata, a novel written during the closing years of the 1880s and published in 1891, issues from the later period of Tolstoy's literary career, which followed his moral and spiritual crisis.... ...
11 Pages (2750 words) Essay

CASE STUDY FOR Analyse the trends of wine, beer and spirits

House drinks include distinguished tavern standbys, designer cocktails, assorted wines, as well as a wide selection of sipping spirits.... ach of the wines in our list is of limited production, prepared in a hands-on manner, and free form over-manipulation.... It recorded an annual compound growth rate of about 1....
3 Pages (750 words) Case Study

Dry farming the Zinfandel grape varietal

Tablas Creek Vineyard in Paso Robles believes that their dry-farmed berries are essential to the balance and expression of their wines.... Zinfandel grape variety was introduced to California during the Gold Rush somewhere between 1852 and 1857 from Croatia and became it widely planted because it thrived so well in the state's climate and soil....
5 Pages (1250 words) Essay

Winery in Galveston Market Analysis

In case the distribution channels face ignorance, there can be a substantial impact on a wine corporation.... Categorically, white wines are manufactured from bright-coloured grapes and are commonly lighter in flavor than red and blush wines respectively.... On the other hand, red wines are characteristically formed from darker grapes, and their stalks are mixed together in the crushing process....
5 Pages (1250 words) Research Paper

Criminalization of Sodomy Laws is Unconstitutional

Under these circumstances, encroaching into their private domain and arresting them, as occurred in the case of Lawrence, constitution a violation of constitutional rights and therefore the law on sodomy is unconstitutional.... The researcher of this essay aims to analyze sodomy laws, that may be gender neutral or gender specific....
15 Pages (3750 words) Essay

The Case of Bowers Versus Hardwick

This term paper "The case of Bowers Versus Hardwick" presents the arguments following the events of the case of Bowers v.... Hardwick.... Bowers v.... Hardwick sparks dilemma and criticism were proving the constitutionality of the law and upholding the rights of the people....
10 Pages (2500 words) Term Paper

Terroir in New Wine Regions - Possible Scientific Reasons for Terroir and Its Effect on Marketing and Tourism

The paper 'Terroir in New Wine Regions - Possible Scientific Reasons for Terroir and Its Effect on Marketing and Tourism' is a potent example of a case study on agriculture.... The paper 'Terroir in New Wine Regions - Possible Scientific Reasons for Terroir and Its Effect on Marketing and Tourism' is a potent example of a case study on agriculture.... The paper 'Terroir in New Wine Regions - Possible Scientific Reasons for Terroir and Its Effect on Marketing and Tourism' is a potent example of a case study on agriculture....
6 Pages (1500 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us